Britain's new government has unveiled a "radical" package of spending cuts to tackle its £100 billion ($150 billion) deficit that will result in as many as 490,000 public sector employees losing their jobs. All in all, Prime Minister David Cameron will cut spending by 19 percent (or $130 billion) over the next four years, a move projected to eliminate the country's structural deficit by 2015. Should the U.S., now adding more than $1 trillion annually to national debt, take a lesson from Britain's punishing cuts? (Read David Frum on David Cameron)
At very least, we should be paying attention: With its "legion of international banks," says Derek Thompson at The Atlantic, Britain faced a similar crisis to the U.S: "Years of overspending and financial wizardry coming to a crashing halt in 2008." But where the U.S. has gone for "moderate stimulus and high deficit-spending," Britain has instead chosen "stiff-upper-lip" spending cuts. This will be an "interesting case study" for us.
"Why Britain's age of austerity is so important"
The U.S. needs to follow Britain's lead: We know Obama doesn't believe "belt-tightening is the way to prosperity," says Veronique de Rugy at the National Review. But "stimulus spending hasn't helped the country recover so far." The U.S. should "change its course" and take a leaf out of Britain's book. "Let's give spending cuts a chance." It worked for us after World War II, didn't it?
"What's so different about the U.S. that we can't cut spending?"
Actually, it ought to be the other way around: Britain should be looking to us, says Joseph Stiglitz in The Guardian. America's stimulus package worked, despite being "too small and poorly designed." Unemployment in the U.S. is much lower than "what it otherwise would have been -– over 12 percent." Austerity at a time of recession "lowers GDP and increases unemployment." Britain is making a mistake and we shouldn't duplicate it.
"To choose austerity is to bet it all on the confidence fairy"